Aslush fund is a fund or account used for miscellaneous income and expenses, particularly when these arecorrupt or illegal.[1] Such funds may be kept hidden and maintained separately from money that is used for legitimate purposes. Slush funds may be employed by government or corporate officials in efforts to pay influential peoplediscreetly in return for preferential treatment, advance information (such asnon-public information in financial transactions), and other services.[2] The funds themselves may not be kept secret but the source of the funds or how they were acquired or for what purposes they are used may be hidden. Use of slush funds to influence government activities may be viewed assubversive of thedemocratic process.
A slush fund can also be a reserve account used to reduce fluctuations in an organization's earnings by withholding them when they are high and supplementing them when they are low. This type of slush fund is not inherently corrupt, but is nonetheless a form ofearnings management that tends to mislead stakeholders about the organization's financial condition.[3]
Richard Nixon's "Checkers speech" of 1952 was a somewhat successful effort to dispel a scandal concerning a slush fund ofcampaign contributions.[4] Years later, Nixon's presidential re-election campaign used slush funds to buy the silence of the "White House Plumbers".[5]
Financial derivative traders forEnron employed a slush fund system called "prudency reserves," in which the department reported part of each trade's profit or loss to the company and withheld the remainder. This system was originally used to regulate the trading department's profits, but also enabled the company to conceal large profits during the2000–01 California electricity crisis.[6]
Hockey Canada maintained three slush funds to pay for sexual assault settlements perpetrated by ice hockey players and other uninsured claims. Membership fees from across Canada were used to fund at least one of these slush funds.[7] The existence and purpose of these slush funds were discovered during theHockey Canada sexual assault scandal in 2022.[8] $7.6 million in 11 sexual assault settlements were paid out by these funds between 1989 and 2022.[9]
"Slush fund" was originally anautical term for the cash that a ship's crew raised by sellingfat (slush) scraped from cooking pots totallow makers. This cash was kept separate from the ship's accounts and used to make small purchases for the crew.[10][11]